On the company’s third-quarter earnings call last week, WeWork CEO Sandeep Mathrani announced they will close roughly 40 locations across the U.S. in search of additional cost savings.
The locations were singled out for closure because they didn’t meet the company’s design criteria, were obsolete or were in a market with “oversupply,” Mathrani noted.
In order to exit these leases, WeWork estimates it will pay about $200M in total, with cost savings down the road contributing an estimated $140M to the company’s EBITDA. Most of the closures will occur in November, though the last few might occur in January.
The average term remaining on the leases was 10 years, with average occupancy in those locations at about 42%, Mathrani said.
“Demand didn’t come back as swiftly as we thought,” Mathrani said. “And so we decided that to be profitable and sustainably profitable, we should close locations that are obsolete.”
The once-dominant coworking firm lost $629 million in the third quarter, or about $0.66 a share — a slight improvement from the $635 million it lost in the second quarter.
WeWork’s losses totaled approximately $1.8B in the first three quarters of this year, down from $3.8B in the same period of 2021. Year-to-date revenue is roughly $2.4B, up from $1.85B in the first three quarters of 2021, Bisnow reported.
The company’s stock rose on the earnings news, despite the earnings miss. As of last Thursday afternoon Eastern Time, the company’s stock sat around $2.60 a share — up 7% on the day but still down about 78% from its debut last year.
